Insanity Defined

Albert Einstein was once quoted as saying that the definition of insanity is “doing the same thing over and over again and expecting different results” (paraphrased). It is certainly a feasible elucidation considering Mr. Einstein’s world. I posit that as it relates to the wine world, the definition of insanity is ‘anyone that could actually believe Rudy Kurniawan is insane or is not competent to stand trial’. Far too much work went into his ‘enterprise’ for him to be legally insane or incompetent. Disclaimer: everything in this post is my opinion, and although the information below is deemed reliable it may turn out to not be so.

Mr. Kurniawan is the now-infamous and alleged counterfeiter of fine wine whose trial is expected to begin January in Manhattan Southern District Federal Court. After a number of allegations spread out over the course of months (and conjecture going back years), the FBI raided Kurniawan’s home in the Los Angeles area to find all the equipment needed for producing fakes, including thousands of counterfeit wine labels for the most expensive Bordeaux and Burgundy wines, empty wine bottles of various vintages, capsules, corks, and equipment and supplies appurtenant to the production of counterfeit wine. The fact that on more than one occasion he tried to consign wines that were known to be fakes to fine wine auctions, combined with the evidence found in his home, in my opinion leaves little doubt as to his guilt. He was manufacturing and peddling counterfeit wine.

Questions arose about Kurniawan’s connection to faux vin at least as early as ‘08, and likely earlier by some accounts. At a 2008 fine wine auction in New York Kurniawan consigned 268 bottles to be sold. One of the bottles was a 1929 Ponsot, Clos de la Roche (a Burgundy grand cru vineyard), but Domaine Ponsot didn’t produce wine from this vineyard until 1934. He also put 38 bottles of various vintages of Ponsot, Clos Saint-Denis on the block, which were represented and labeled as vintages prior to the year Ponsot began making wine from this grand cru vineyard. Burgundy’s Domaine de la Romanée-Conti and a number of other great wine estates figured into becoming dominant victims of fraudulent wine as well. From here things began to unravel for Kurniawan due to Laurent Ponsot’s quest for the truth about the origins of these fake wines. Mr. Ponsot was very concerned, and rightly so, that these counterfeit wines coming into the market were usurping Domaine Ponsot’s celebrated reputation as a producer of some of the finest wines from Burgundy.

It is known that Kurniawan dumped a staggering $35 million dollars worth of wine onto the market in the course of two auctions in 2006. Of course it’s impossible to know exactly how much of that was not the real thing but experts can say with some certainty that there are literally millions of dollars of counterfeit wine on the market with the possibility that much of it was produced and sold by Kurniawan. Notorious for his outrageous spending, whenever he ordered rare and expensive wine at restaurants, he reportedly always asked for the empty bottles to be shipped to his home. He was also selling wine directly to collectors outside of the auction world and one collector on the east coast reportedly bought several million dollars of wine from Kurniawan consisting of old and rare vintages of Bordeaux and Burgundy. Shortly after selling $35 million dollars worth of wine Kurniawan began asking his wealthy friends for loans, while allegedly also fraudulently using the same pieces of valuable art for collateral with different lenders. By taking into account some of his more questionable business dealings, some believe he was not acting alone, which is even more chilling. In fact Mr. Ponsot claims to have figured out who Kurniawan’s accomplice is but is not spilling the information so far.

Kurniawan’s latest defense firm sent a request to Judge Richard Berman on November 7 requesting that a forensic psychiatrist and a forensic psychologist examine its client, of course both experts being selected by the firm. The prosecution, understanding the implications of this request, made a statement that Kurniawan’s defense team may seek to raise a claim of insanity or claim that he is not competent to stand trial. The defense denies that they wish to employ this tactic but so far haven’t given any tangible reason why they would want Kurniawan examined. In preparation for trial they have, however, filed a statement with the court that details questions they would ask during jury selection, and ends with a summation of Kurnaiwan’s not guilty assertion: “Upon being introduced to the exclusive world of fine wine, he quickly became recognized as one of the finest palates in the world. He suddenly found himself immersed in an exotic universe of wheelers and dealers in rare and expensive wines. He was soon buying and selling wines in a rarified world populated by rich, often arrogant individuals who frequently looked for a scapegoat for perceived defects or shortcomings in their dealings with others. Mr. Kurniawan is that scapegoat.” This has to be one of the most iniquitous fairy tales ever concocted by a lawyer – kudos counselors!

The prosecution’s response was swift, firing off a letter to the Judge Berman that, “defense counsel may have already decided to present expert testimony to establish a defense of insanity or to offer inadmissible testimony about the defendant’s mental state in an attempt to refute scienter [intent or knowledge of wrongdoing].” The prosecution also makes clear that they are concerned that the whole thing may be a delay tactic to avoid going to trial in early January.

On November 8 defense attorney Jerome Mooney III responded with a letter to the court stating, “We are not seeking and do not anticipate, an incompetency claim or an insanity defense. It is not our intention to delay the trial. Instead, there are certain things that have come to our attention during our brief time with our client that we believe require further evaluation. I have explained this in more detail to the government. It is significant to note that, at this point, we have only asked that the doctors be allowed access to our client in order to perform their evaluation. If he were not held in detention that would have been something we could have done without even telling anyone, especially the world.” The letter to the court goes on to state that the defense doesn’t know whether the information they find after examination will prove useful or not.

Even without asserting the plea of insanity or incompetence, there are lots of ways to use the expert witnesses (the psych guys) to sway a jury and one of the underpinnings of getting a ‘not guilty’ verdict is reasonable doubt. There is no question that such counterfeiting activity of the scale in this case would require a lot of knowledge, forethought, research, and premeditation, which is not something just anyone is capable of pulling off. Even the social aspect of becoming a person of acceptable, and even celebrated, status into the culture of fine wine had to be carefully planned, cultivated, and executed.

Maureen Downey, who owns Chai Consulting in San Francisco, is one of the world’s foremost experts on counterfeit wine and revealed this summer at an anti-counterfeiting seminar in Napa that the formula allegedly used by Kurniawan to create a 1945 Château Mouton Rothschild fake: ½ bottle of 1988 Pichon-Longueville Lalande (average today, $160), ¼ bottle of oxidized Bordeaux to give it a sense of age (lets say $50 to be generous), and ¼ bottle of Napa Cabernet Sauvignon to provide body and a bit of freshness ($50, again to be generous – all costs are my estimates except for the 1988 Bordeaux from Wine Searcher), for a total of $130 plus packaging to make. A real 1945 Mouton Rothschild sells for $28,990 at Sokolin & Co. as of this writing and I believe Dave Sokolin would have sourced the real thing. Nice margin if you can get away with it, but so far Rudy ultimately did not. As Ms. Downey addressed the future of counterfeit wine to me to me, “it’s going to be a mess.”

The machinations of Rudy Kurniawan have single-handedly tainted the landscape of buying wine on the secondary market, whether from other collectors, at retail, or auction. Considering the ubiquitous counterfeit wine in China, which is sure to arrive on our shores someday, and the amount of fakes that have already entered into the US market, to which I believe Kurniawan contributed greatly, leaves virtually no safe haven to buy fine wine except from legitimate wine merchants, the châteaux, or domains themselves. It is my hope that Kurniawan indeed becomes a ‘scapegoat’ in the sense that the US sends a very loud and clear message to every would-be counterfeiter by convicting and sentencing this scrofulous character to many years of self-inflicted misery. As of today, Judge Berman approved the psychiatric examination.